The Canadian dollar weakened marginally against the US dollar on Friday, but remained within a narrow range as the spotlight was directed on sovereign debt fears in Europe. Euro-zone debt concerns warred with expectations of a rate hike by a hawkish European Central Bank, with volatility in the euro heightened on Friday by a ratings downgrade on Ireland to just above "junk" status.
"It's more of a story of what's going on outside of Canada," said Shaun Osborne, chief currency strategist at TD Securities, noting that the underlying trend was still toward a higher Canadian dollar, even if it was not significantly higher than current levels.
"It's a bit of a range trade. There's probably a short-term bias for a bit of a correction in the rundown for USD/CAD in the last month or so. It probably means no more than a bounce to C$0.9700 or C$0.9750." The currency finished the week at C$0.9601 to the US dollar, or $1.0416, down slightly from Thursday's North American finish of C$0.9598 to the US dollar, or $1.0419. That followed a low of C$0.9650 or $1.0363 touched earlier in the session.
"I don't think foreign investors are really overly concerned to be honest," said David Bradley, director of foreign exchange trading at Scotia Capital. "It feels as though with USD/CAD, anytime we test above C$0.9650 it seems there's plenty of selling interest. I think there's still a lot of sovereign interest to buy Canadian dollars out there as well." The commodity-linked Canadian dollar was still finding support as oil prices surged on improved US consumer confidence and easing concerns over rising fuel costs.
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